Auto Service World
News   January 6, 2003   by Auto Service World

Spectra Premium Tightening Radiator and A/C Compressor Production

Spectra Premium Industries Inc., has announced that it will stop manufacturing complete copper and brass radiators at its Stratford plant in Ontario, copper and brass radiator components at its Debert plant in Nova Scotia and re-manufactured A/C compressors at its Laval plant in Quebec.
Annual savings before income taxes as a result of these rationalizations are evaluated at close to $2 million and will begin having an impact on the results as of the second quarter of fiscal year 2003-2004. On the other hand, a non-recurring charge before income taxes of $4 to $6 million will be attributed to the results of the fourth quarter of fiscal year 2002-2003 as a result of the cessation of these activities. This charge results from the estimated loss on dispositions and write-offs of equipment, moulds and tooling, raw material and component inventories, as well as costs related to employee dismissals. However, this charge will not have a significant impact on cash flow as it is mainly made up of assets written-off. The manufacturing activities of complete copper and brass radiators at the Stratford plant in Ontario will cease near the end of April 2003.
For close to 10 years now, automobile manufacturers have been replacing copper and brass radiators with aluminum radiators on new vehicles. As a result, copper and brass radiator sales are constantly declining and this product should cease to exist almost entirely in the automotive aftermarket within five to seven years. Spectra has recently engaged in converting into aluminum the production of a considerable number of its radiator models previously produced in copper and brass and numerous other models will be converted before the end of April 2003.
“The cessation of these manufacturing activities reflects our strategic orientation of focusing our efforts on manufacturing, developing products and investing in profitable product lines where we rank as leader in the industry," says Jacques Mombleau, president and CEO of the company. "The cessation of our manufacturing activities of complete copper and brass radiators in which we have not invested during the past two years, will enable us to convert much of our equipment for the production of aluminum radiators during the upcoming year. This will allow the corporation to reduce investments in equipment required for this product line, where we are up with the leaders in North America. We are in the process of establishing partnerships with high profile enterprises offering quality products to meet our needs for the supply of copper & brass radiators, and at the same time, several of these enterprises will acquire our aluminum radiators, enabling us to increase profitability on our complete radiator line, while continuing to offer quality products to our clientele.”
The corporation will continue to offer copper and brass radiators to its clientele as it will outsource this product line from high profile international suppliers already offering products of superior quality to original equipment manufacturers and in the aftermarket.
These measures will result in the dismissal of 60 employees at the Stratford plant in Ontario (total of 203 employees compared to 263) and the dismissal of close to 30 employees at the Debert plant in Nova Scotia (total of 85 employees compared to 115).
Manufacturing activities of re-manufactured A/C compressors at its Laval plant in Quebec ceased as of today, following the recent conclusion of a supply agreement with one of the main North-American suppliers of re-manufactured A/C compressors and other A/C parts. This measure results in the dismissal of close to fifteen employees of the actual workforce of 160 at this plant.
The corporation will continue its manufacturing activities of re-manufactured A/C compressors at its Mississauga plant in Ontario, which employs close to ten employees, to satisfy special orders of its clientele.

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